Bearish Themes Regain Hold of Oil Markets

Oil is on track for a second straight weekly loss as a stronger dollar and China concerns regain pressure as well as OPEC+ volumes expected to return in October.

• The dollar has regained on stronger economic data out this week on the U.S. labour market and manufacturing.
• Chinese officials called for ‘proactive’ stimulus to distribute growth across the economy but the lack of direction is leaving markets unclear about the implementation of any measures.
• China's economy grew by a slower-than-expected 4.7% in the second quarter according to official figures.
• Oil saw a boost mid-week on stronger than expected U.S. stock draws.
• Some potential measures from a Trump victory would be generally bearish for oil with potential for Iran sanctions not likely enough to counter an approximate 2mb/d global surplus in H1 2025, according to a Citigroup note cited by Bloomberg earlier this week.
• The prompt crude spreads remain strong with WTI the highest since October and Brent the highest since late Apil. Dec24-Dec25 spread have however softened in line with the move in front month futures and are towards the lower end of the range seen so far this month.